Tucows 2013 Annual Report Download - page 44

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Domain Services
75
%
83
%
Value Added Services
2
%
2
%
Total Wholesale
77
%
85
%
Retail
16
%
8
%
Portfolio
1
%
1
%
Network, other costs
5
%
5
%
Network, depreciation and amortization costs
1
%
1
%
100
%
100
%
Total cost of revenues for Fiscal 2013 increased by $10.0 million, or 11%, to $98.5 million from $88.5 million in
Fiscal 2012 primarily the result of increased sales volumes. Prepaid domain registration and other Internet services fees as of
December 31, 2013 decreased by $1.5 million, or 3%, to $56.0 million from $57.5 million at December 31, 2012. Prepaid
domain registration and other Internet services fees have been impacted by certain of our customers, who have acquired their
own registrar accreditation, no longer registering new domain names on our platform.
Wholesale
Costs for Wholesale for Fiscal 2013 increased by $0.4 million to $75.6 million, when compared to Fiscal 2012,
primarily the result of increases in registration fees paid to the registries that were implemented on January 15, 2012 and the
fact that certain marketing initiatives undertaken by both vendors and resellers in fiscal 2012 have either been significantly
scaled back or cancelled for fiscal 2013.
Retail
Costs for Retail for Fiscal 2013, increased by $9.3 million, to $16.1 million, when compared to Fiscal 2012. This
increase resulted primarily from additional costs of $8.5 million to $12.6 million incurred for Ting mobile device and service
sales made during the year, as well as the increased cost resulting from the additional volume in Hover services.
45
Portfolio
Costs for Portfolio increased by $0.4 million for Fiscal 2013, to $1.2 million when compared to Fiscal 2012,
primarily the result of costs associated with our New gTLD applications.
Network Costs
Network costs decreased by $0.2 million for Fiscal 2013, to $5.5 million as compared to Fiscal 2012.
These results reflect our improved efficiency in operating and managing our co-location facilities, which has also
enabled us to decrease our capital spend on network equipment.
SALES AND MARKETING
Sales and marketing expenses consist primarily of personnel costs. These costs include commissions and related
expenses of our sales, product management, public relations, call center, support and marketing personnel. Other sales and
marketing expenses include customer acquisition costs, advertising and other promotional costs.
Year ended December 31,
2013
2012
Sales and marketing
$
12,141,036
$
8,701,446
Increase over prior period
$
3,439,590
Increase - percentage
40
%
Percentage of net revenues
9
%
8
%
Sales and marketing expenses for Fiscal 2013 increased by $3.4 million, or 40%, to $12.1 million as compared to
Fiscal 2012. This increase primarily related to workforce and marketing expenses incurred in connection with our Ting
mobile service offering.